The Four Ways to File a Canadian Year-End — and How to Pick the Right One
Authored by Joel MacGillivray, CPA, Manager of Corporate Reporting
Most business owners think picking a year-end engagement is complicated. It isn't.
I've sat across from a lot of owners over the years. Most conversations about what level of year-end service they need get over-complicated, usually because the firm they've been with has been pitching tiers by price instead of by fit.
Here's the honest version. There are only four ways to close a Canadian corporate year-end, and most of the decision comes down to one question:
Who actually reads your financial statements?
That's it. The rest is fine-tuning. If only you and the CRA look at the file, you need one thing. If your bank has a loan covenant, you need another. If you have outside investors, you're in a different conversation entirely. Revenue, transaction volume, industry — those matter at the edges, but who reads the statements does most of the work.
This guide walks through the four options — what each one actually is, what you get, what it typically costs in Canada, and how to read your own situation in about two minutes.
The four options, in order from least to most
1. GIFI-only filing
Not technically a CPA engagement. A GIFI-only filing means your T2 corporate tax return gets filed with the CRA using their General Index of Financial Information codes — the required format for the financial data inside the return. Every Canadian corporation already does this.
What you get: A filed T2. The CRA has what it needs.
What you don't get: No separate financial statements, no memo, no year-end conversation, no assurance of any kind.
Indicative fee range: $800 – $2,500
Who it tends to fit: Inactive corporations. Holding companies. Owner-managed businesses where nobody outside the owner and the CRA ever looks at the numbers.
The clearest example I run into is family investment holding corporations — two transactions a year, one owner, no readers. Anything more than GIFI is overkill.
2. Compilation Engagement (CSRS 4200)
The first real "engagement" tier. Governed by CPA Canada's CSRS 4200 standard (effective December 2021, replacing what used to be called a Notice to Reader).
What you get: Everything in the GIFI filing, plus formal financial statements — a balance sheet showing where the business stood at year-end, an income statement showing how it performed, compiled in a readable and comparable format. At our firm we wrap each compilation engagement with a memo flagging anything unusual we saw, your tax provision requirements, upcoming regulatory deadlines, and any recommendations we'd make. And we sit down with you afterward to walk through it.
What you don't get: Assurance. We assemble the statements, we don't verify them. The compilation report makes that explicit.
Indicative fee range: $2,000 – $7,000
Who it tends to fit: Most owner-managed businesses with active operations. If you want to actually run the business off your numbers — plan, budget, compare year to year — compilation is the first meaningful step up from a GIFI-only filing.
3. Review Engagement (CSRE 2400)
Into assurance territory. A Review Engagement (CSRE 2400) includes everything in a compilation, plus inquiry and analytical procedures sufficient for the CPA to state whether anything came to their attention suggesting the statements are materially misstated.
That phrase — limited assurance — is the key. It's not an audit. The reasonableness of the numbers is examined through specific procedures.
What you get: Compiled-level statements plus a review engagement report, giving limited assurance.
What you don't get: A full audit. No substantive testing, no confirmations, no internal-control evaluation.
Typical cost in Canada: $5,000 – $18,000 (industry range, not an FHB quote — see the note below)
Who it tends to fit: Businesses with someone outside the owner reading the statements. Most commonly a bank with a loan covenant specifying financial statements, an outside shareholder who isn't involved day-to-day, a franchisor, a bonding company, or a prospective buyer.
4. Audit Engagement
The highest level of assurance available. An audit under Canadian Auditing Standards (CAS) gives a formal opinion on whether your financial statements present fairly, in all material respects, the financial position and operations of the business.
What you get: Everything in a review, plus substantive testing of balances and transactions, independent confirmations (bank, receivables, payables where applicable), evaluation of internal controls, and a formal audit opinion.
What you don't get: There isn't a tier above this for a standard corporation.
Typical cost in Canada: $15,000 – $60,000+ (industry range, not an FHB quote — see the note below)
Who it tends to fit: Businesses with significant external accountability. Institutional investors. Government funders above certain thresholds. Regulated industries. Many not-for-profits. Any business whose agreements contractually require an audit — most VC-backed companies, most substantial government-funded organizations, many franchisors.
A note on scope. F.H. Black & Company focuses on GIFI filings, Compilation Engagements, and consulting and controllership work — including the financial-statement and reporting needs underneath a Review or Audit. We don't take on new Review or Audit engagements ourselves. If your situation points to one of those, the best first step is a short conversation: we'll confirm whether you genuinely need that level of assurance, point you toward the right fit, and look at whether there's a better way to support the business underneath the requirement.
Review and Audit figures are indicative industry ranges for Canadian SMBs — FHB doesn't take on new engagements at these tiers (see the scope note above).
Reading your own situation
Once you know who reads your statements, picking the tier is usually straightforward. Here's how I actually walk through it with clients.
Step one: Who reads the statements?
Just you and the CRA → GIFI is enough. Compilation if you want something you can run the business from.
A bank with a loan covenant → Review minimum. The covenant usually specifies.
An outside shareholder not involved day-to-day → Compilation minimum, Review often.
Outside investors (VC, PE, angels) → Audit, usually. Definitely by the next round.
A government funder or grantor → Review minimum. Audit above certain thresholds. Check the specific agreement.
A franchisor or bonding company → Review minimum, often Audit. Check the agreement.
A prospective buyer or successor → Review minimum. Buyers want assurance-backed statements during diligence.
Step two: Does any agreement specify the tier?
If your loan, investor, franchisor, or funder agreement specifies a required engagement level, that's your floor. No matter what the other factors say.
This is the single most common place owners get surprised. Your bank's covenant letter has this language in it, usually in a section called "Financial Reporting" or similar. Read it. Or have your CPA read it. More than once I've had a new client arrive with a Compilation engagement in hand and a covenant that required Review — and the bank had been letting it slide for years until a renewal cycle came up.
Step three: Are there size or complexity factors that push it up?
At $50M+ revenue, external readers usually expect a tier above whatever the stakeholder question alone would suggest. High-complexity industries — significant inventory, cash-intensive operations, regulated activity, multi-entity structures — can push you up too.
That's the whole framework.
Three real scenarios
The owner-operator consultant
Solo consulting corporation. $300K revenue. No employees. Personal line of credit with a bank, no covenants. No outside investors or shareholders. Straightforward service business, low industry risk.
Who reads the statements: The owner and the CRA. The fit: GIFI-only is enough for the CRA. Compilation is worth considering if the owner wants readable statements for planning, lending conversations, or future tax moves.
The $3M manufacturer with a bank loan
Growing small manufacturer. $3M revenue. 20 employees. $600K operating line with a covenant tied to minimum working capital and a debt-service coverage ratio.
Who reads the statements: The bank, via the covenant. The fit: Review Engagement. Most covenants specifying financial statements require Review at this size, and clean Review statements are much smoother at covenant renewal than a compilation that the bank has been accepting on sufferance.
The $30M software company with outside investors
Growth-stage SaaS business. $30M revenue. Series B closed last year. Board of directors. 409A valuation in place. Series C likely in 18 months.
Who reads the statements: The investors, the board, prospective follow-on investors.
The fit: Audit. Next-round due diligence will require at least one prior-year audit, often two. Starting the audit process now — while the numbers are clean and the team is small — is dramatically easier than starting it in year five while closing a raise.
When to move up a tier
Most businesses don't change engagement levels every year. A few signals that say it's time:
A new bank loan or credit facility with covenants is being negotiated.
An outside investor is coming in.
You're preparing for a sale, succession, or major transaction within the next two years.
A new stakeholder is starting to read your statements — a regulator, a franchisor, a bonding company, a funder.
Revenue has crossed a threshold where your industry's typical expectation changes.
You've had a significant internal control failure or fraud incident.
Moving up is smoother when you plan it. Bump the tier at a year-end boundary, not mid-stream. And when you do, tell your CPA why. The transition is much easier when we know which external reader the new statements are for.
How to check your own fit in two minutes
I built a short walkthrough that asks six questions — who reads your statements, whether any agreement specifies a tier, and a few size and industry factors — and shows you where you likely sit with the reasoning behind it. It's not a substitute for a conversation, but it's a useful starting point.
If you'd rather talk it through, reach out and we'll give you a straight read on which tier fits your specific situation. No sales pitch.
→ Get in touch with F.H. Black & Company
Joel MacGillivray is a CPA in F.H. Black & Company's Corporate Reporting Division in Winnipeg. He works with owner-managed businesses across Canada on year-end engagements, financial reporting, and controllership support.
